High-Profile Tax Evasion Cases: Lessons for Ordinary Taxpayers

The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) have been implementing their Run After Tax Evaders (RATE) program since 2005. The program aims to investigate criminal violations of the National Internal Revenue Code of 1997 and prosecute criminal cases that will generate maximum deterrent effect, enhance voluntary compliance, and promote public confidence in the tax system.

Tax evasion cases of politicians, big businesses and even celebrities have been in the news to make the public aware that the BIR is committed in making sure that everyone is paying their fair share of taxes.

Under the previous administration, 492 tax evasion cases were filed with the Department of Justice (DOJ), with Senator Emmanuel “Manny” Pacquiao figuring in the biggest and most controversial tax evasion case amounting to Php2.2 billion.

In the 2016 Annual Report of BIR, a total of 72 RATE cases were filed with the DOJ, with the estimated tax liabilities amounting to Php10.72 billion.

But despite all the cases that were filed most especially against high-profile persons and companies, only a Valenzuela City-based bus operator was slapped a maximum prison sentence of 16 years for Php14.9 million tax evasion case as promulgated by the Court of Tax Appeals (CTA) on March 12, 2018. Meanwhile, the CTA acquitted former First Gentleman Miguel “Mike” Arroyo on March 28, 2018 in the Php27 million tax evasion case filed against him for failure of the prosecution to prove his guilt beyond unreasonable doubt.

Across all taxpayers, there are common violations being committed due to ignorance or greed to evade paying the right taxes such as failure to file tax returns or pay taxes, deliberate under-declaration of income or over-declaration of expenses by more than 30 percent of that declared per return, hiding or transferring of assets or income and keeping more than one set of books of accounts.

Tax evasion is considered a criminal offense and has serious consequences i.e., civil penalties resulting in the imposition of a 50-percent surcharge and criminal penalties resulting in imprisonment and/or imposition of fine upon conviction by the court, among others.

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It should also be noted that income from all sources are taxable including income from corruption and other illegal means. Therefore, all corrupt BIR examiners and government officials should be slapped with tax evasion cases. But with politics playing its part, the government can determine who they want to charge as tax evaders. Every administration has its own set of “political enemies.”

In the previous administration, they impeached former Chief Justice Corona while the current one is using it to impeach Chief Justice Sereno and deal with Rappler and Dunkin’ Donuts of the Prietos, who own the Philippine Daily Inquirer that has been criticized several times by President Duterte for alleged bias against his administration.

Any underdeclared asset and income in the submitted Statements of Assets, Liabilities and Net Worth (SALN) of all public officials may be used against them most especially as BIR has 10 years from date of discovery of the fraud case to assess and collect the tax.

Governance is a shared responsibility and I always believe that we have to help the government most especially the BIR in running after real and big-time tax evaders. One of my proposals is the general tax amnesty which will allow everyone to start afresh and be given a chance to pay the right taxes. What we aim is to have a culture of honesty and integrity in paying taxes.

For individuals and corporations, I suggest you do tax planning and compliance review to make sure you haven’t overlooked any tax regulations or make sure your accountant or bookkeeper files and pays your taxes correctly and on time.

Asian Consulting Group (ACG) is a social enterprise providing strategic tax advisory to help taxpayers pay the right taxes. To get rid of issues and harassment during BIR audit, we offer a game-changing tax strategy through the Citizen Tax Planning (CTP) which helps companies pay the right taxes without the burden of unnecessary penalties and compromises. It’s an investment to help individuals and corporations save millions of taxes from unplanned tax compliance resulting in higher tax assessments with more than 200 percent penalties during BIR audit.

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Raymond Abrea, popularly known as the Philippine Tax Whiz, is one of the 2017 Outstanding Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, Distinguished Bedan in the field of Accounting and Taxation, and founding President of the Asian Consulting Group (ACG) and Center for Strategic Reforms of the Philippines (CSR Philippines). Follow Mon on Twitter, Facebook and Instagram. You may also e-mail him at mon@acg.ph.

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